Filing for bankruptcy can be an overwhelming experience, but it can also provide you with a new financial beginning. In February 2020, the Small Business Reorganization Act (SBRA) was enacted, which introduced a new type of bankruptcy called Subchapter 5 bankruptcy. The SBRA was created to help small businesses and individuals with debts under $2,725,625 to reorganize their debts and keep their businesses alive. In this blog post, we will discuss the benefits of Subchapter 5 bankruptcy, how to file for it, what happens during and after filing, and how Juan C. Velasco, Esq. can assist New Jersey residents with sub chapter 5 bankruptcy matters.

One of the advantages of Subchapter 5 bankruptcy is that it allows small businesses to restructure their debts and retain ownership of their company. This kind of bankruptcy is faster, less expensive, and easier than a Chapter 11 bankruptcy. Subchapter 5 bankruptcy also allows debtors to modify their mortgages on investment properties, if the sale or refinance of the property is not feasible. Debtors can also modify their car loans, reducing the amount owed to the fair market value of the car and reducing the interest rate. 

To file for Subchapter 5 bankruptcy, you have to complete specific forms, such as a petition, schedules, and a proposed plan, and submit them with the court. You also have to attend a meeting with the trustee and the creditors and provide the necessary documentation to support your case. If your proposed plan is approved by the court and meets the bankruptcy code's requirements, it will be confirmed, and you will make monthly payments to the trustee for three to five years. After successful completion of the plan, any remaining unsecured debt will be discharged, and you will be debt-free.

What happens after filing subchapter 5 bankruptcy

After filing, you'll have an automatic stay, a legal injunction that stops most creditors from making collection attempts, and may even stop foreclosure and repossession proceedings on your property. You will also have to attend a hearing to go over the proposed plan with the trustee and the creditors, and possibly modify the plan if needed. During the three- to five-year plan period, you will make monthly payments to the trustee, who will distribute the funds to your creditors. Once the plan period is over, any remaining unsecured debt will be discharged.

Juan C. Velasco, Esq. is a trusted bankruptcy and debt relief lawyer who can help you navigate the complex process of Subchapter 5 bankruptcy. He can assist you in preparing necessary documents, attending meetings, and representing you in court. He offers tailored legal solutions that fit your specific situation and can help you eliminate your debt and achieve financial relief. 

Subchapter 5 bankruptcy can provide a powerful financial solution for small businesses and individuals struggling with debt. It is a faster, less expensive, and more accessible form of bankruptcy than Chapter 11 bankruptcy. Filing for Subchapter 5 bankruptcy can be challenging, but the benefits of doing so can be life-changing. With the help of an experienced bankruptcy lawyer like Juan C. Velasco, Esq., you can navigate the bankruptcy process with confidence and achieve lasting financial relief. If you are a New Jersey resident facing financial difficulties, contact Juan C. Velasco, Esq. to discuss your options for Subchapter 5 bankruptcy.